Economist sees ACA raining on health care parade

August 9, 2014

‘The good news is that dermatologists are very well positioned to be innovative leaders,’ Jeff Bauer, PhD, said. ‘They already understand patient-centered outpatient care and have shown a progressive entrepreneurial orientation.’

Before he became a health futurist and medical economist, Jeff Bauer, PhD, was a weatherman. So as he talks about the future of health care, Dr. Bauer flashes back to his former job and sees wildly tempestuous skies on the horizon.

Dr. Bauer said more change will occur in this decade than has occurred in the last 50 years.“I foresee an unprecedented number of medical enterprises failing, lots struggling but surviving, and many achieving remarkable success,” Dr. Bauer said of the coming years. “The successful providers will re-invent health care. By end of this decade, the way we deliver services, pay for them, and, indeed, define health care are going to be very different from what they were in the 20th century.”

Dr. Bauer has spent more than four decades in health care, so he has a long perspective behind the analysis and forecast, “A Realistic Update on Health Reform: Responding to Challenges and Opportunities,” he presented as the Guest Speaker during the Friday Plenary.

“We are in a chaotic situation, with everything from very serious threats to remarkable opportunities,” he said. “Until now, medical spending has risen every single year since Medicare and Medicaid were created in 1965, and it has claimed a bigger share of the gross domestic product. We’ve been lulled into a false sense of security that health care was always a growth industry and more money would always be coming in. I want to put that expectation to rest right now. Health care in the last two years has shifted from being a growth industry to a stagnant, if not declining, industry.”

His forecast may seem negative, but Dr. Bauer sees a silver lining in the dark clouds because of developments in medical science and technology. Lessons learned from the human genome project have given physicians a better understanding of disease, reshaping diagnosis and treatment for the 21st century.

“The one-size-fits-all clinical paradigm of the 20th century led to acute care,” he said. “We waited for people to get sick, then figured out what they had and put them in a hospital to remove it surgically or eradicate it with powerful drugs. Research sought large samples to compensate for differences in patients, but the studies were always based on the assumption that all had the same disease.

“We now know that diseases with a single set of signs and symptoms can be very different in biological terms. The new approach is finding the specific characteristics of each patient’s pathology and then customizing treatment on a precision basis. We are rapidly gaining enough knowledge to manage the disease process before it requires acute intervention. We are moving from seeking cure to managing care to keep as many patients as possible out of the hospital. HIV is a good example; physicians don’t have a cure, but they have learned how to manage it.”

But as he shifts from medical science and technology back to health care delivery, Dr. Bauer still sees cloudy skies. He is not a fan of the Affordable Care Act (ACA), which he says is taking the wrong approach to improving American health care.

“We absolutely must find ways to improve quality, lower costs, and expand access, but the ACA is focused on increasing the number of people with health insurance — something very different from creating a really good health care delivery system,” he said. “Our fundamental problem is waste. At least 30 cents of every dollar spent on medical care does nothing to improve the population’s health.”

Dr. Bauer challenged dermatologists to become leaders in re-inventing the delivery system by becoming even more efficient and effective.

“The good news is that dermatologists are very well positioned to be innovative leaders,” he said. “They already understand patient-centered outpatient care and have shown a progressive entrepreneurial orientation.

“The ACA pushes us in the wrong direction by trying to change reimbursement first, hoping that system reforms will follow. Instead, we need to cut the waste out of the system first, then extend care to all people with the money saved through performance improvement.”

Out-of-pocket spending on health care has increased dramatically in the last few years, Dr. Bauer said.

“The ACA’s mandated insurance effectively doubles patients’ financial obligations. It makes insurance ‘affordable’ by making patients pay more at a time when their disposable income has quit growing. The vast majority of Americans do not have financial resources to pay their increased portion of the total bill.

“We must start developing new delivery teams, new approaches to outpatient care, and new win-win relationships with all entities involved in payment. To ensure necessary patient access to physicians, multi-stakeholder partnerships offer a lot more promise than the provider consolidation that is currently taking place. For real success, providers need to re-invent health care with the employers, health plans, and patients who collectively pay the bills. This will help dermatologists win battles on things like reading their own slides and doing their own procedures when payers and consumers see they get better care at lower cost because everyone is working together toward that goal.”

A more effective way to improve health care is to have local providers develop their own models of practice rather than force them to follow uniform national practice standards dictated by federal agencies, Dr. Bauer said.

“Regulatory relief must be given in exchange for publiclyaccountable responsibility and authority to deliver care right all the time, as inexpensively as possible,” he said. “Physicians who re-invent their medical specialty accordingly can have a bright future. The successful ones will have practices that look very different five years from now than they did just five years ago. Health professionals who try to protect the traditional, fee-for-service system are the most likely to fail.”

Jeffrey C. Bauer, PhD, is an independent medical economist and health futurist who has worked in health care for 45 years. He was a professor of research and statistics at two medical schools for 17 years, and for the remainder of his career has been a consultant, writer, and speaker. His latest book, “Paradox and Imperatives in Health Care (Revised)” will be published this month. His book on how to look at the future, “Upgrading Leadership’s Crystal Ball,” was published earlier this year.

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